Bank of Israel decided to leave the interest rate unchanged at 0.25%

The Monetary Committee decided to leave the interest rate unchanged at 0.25%. The inflation environment stabilized slightly above the lower limit of the target range. In the last nine months, with the exception of December 2018, annual inflation stood at 1.2% or more. In the coming months, the annual inflation rate is expected to be slightly above the lower limit of the target range, and the expectations and forecasts for a year from the various sources are moving around it. Medium and long-term forward expectations are slightly below the midpoint of the target range.
The economy grew in the fourth quarter of 2018 at a rate consistent with the long-term rate, and indicators of activity support the assessment that the economy continued to grow at a good pace in the first quarter. Labor market data indicate that this remains strong: the unemployment rate has fallen slightly, the employment rate stabilized at a record level, and wages continue to rise. However, several indicators point to a possible moderation in the labor market.
The macroeconomic picture of the global economy continues to indicate a moderation in the rate of growth and inflation, and the forecasts for growth of most of the blocs have been revised downward again. The slowdown in global trade is worsening and includes the emerging markets as well. The main central banks have indicated that the monetary tightening process will be halted for the time being.
Since the last interest rate decision, the shekel strengthened by 1.2% in terms of the effective nominal exchange rate. If the appreciation continues, it may delay the rise in inflation towards the center of the target range.
The Committee estimates that the path of raising the interest rate in the future will be gradual and cautious, in a way that will support a process in which inflation will stabilize around the center of the target range and in economic activity. The Bank of Israel continues to monitor developments in inflation, the real economy, fiscal policy, the financial markets and the global economy, and will act to achieve monetary policy targets in accordance with these developments.